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Two Wheeler Loan Interest Rates

Planning on taking a loan to buy the bike you’ve always wanted? Before you apply for one, take a look at the interest rates being offered by some of the top lenders in the country. The interest rates on these loans range anywhere between 7.35% p.a. to 20.9% p.a.

Two wheeler Loan Interest Rates 2021

The following table helps you compare the interest rates and processing fees charged by lenders in India along with their respective tenures.

Bank Lowest Interest Rate Processing fee
Bank of India 7.35% p.a. to 8.55% p.a. Rs.500 - Rs.10,000
Punjab National Bank 8.70% p.a. to 9.55% p.a. Rs.500 - Rs.1,000
Union Bank of India 9.90% to 10.00% NIL
L&T Finance 10.75% p.a. - 15.00% p.a. At L&T discretion
State Bank of India (SBI) 16.25% p.a. To 18.00% p.a. 2% of the loan amount + GST
Axis Bank 10.80% - 28.30% Up to 2.5% of the loan amount
HDFC Bank 20.90% p.a. Up to 2.5% of the loan amount
Bank of Baroda BRLLR + Strategic Premium + 4.00% i.e. 10.80% p.a. 2% of loan amount minimum Rs.1,000
UCO Bank 11.70% p.a. 1% of the loan amount

How to calculate two-wheeler loan EMI?

Your EMI will show you how much you have to repay the bank each month. Your EMI depends mainly on the loan principal amount, the interest rate, and the tenure you choose.

Your processing fee and prepayment patterns will also play a role in determining your EMI.

It is always better to find out what your EMI will be before you apply for your bike or scooter loan. Comparing various loan EMIs can help you identify the cheapest and most suitable loan.

Two wheeler loan calculator is a unique repayment calculation tool that helps you find out your EMI in a matter of minutes. It is easy to use. Simply type in your loan parameters and get your EMI and loan amortisation schedule right away.

Variable interest rate or fixed interest rate – which is better?

Sometimes, when you apply for a bike loan, your lender may give you the option of choosing between a variable rate of interest and a fixed rate of interest. In such cases, which one should you choose?

The choice between a fixed rate and a variable rate depends on the level of risk associated with each.

Fixed interest rates are usually higher than variable rates. But fixed rates remain constant even when market rates change. For example, if you opt for a fixed rate of 12% p.a., it will stay the same no matter what.

On the other hand, variable interest rates change depending on market conditions. Rates linked to MCLR (Marginal Cost of funds-based Lending Rate) change every time RBI makes a change in the repo rate.

So, your rate could either increase or decrease with time. That said, variable interest rates are usually lower than fixed rates. That’s why borrowers usually prefer taking variable rates.

Tips to Lower Two Wheeler Loan Interest Rate

When you apply for a loan, your aim should be to get one with the lowest possible rate. Here are a few tips that can help you get a lower rate of interest:

  • Clean up your credit: Since your credit score plays a vital role in determining the interest rate you’re offered, look at cleaning up your credit history first. If you don’t have good credit, look at ways to improve it before you apply.
  • Improve your current debt status: In other words, check your debt-to-income ratio. This shows you how much of your current income is going toward repaying loans and credit card bills. Pay off existing loans and bring down this ratio. The lower the ratio, the better your chances are of getting good rates.
  • Negotiate with your lender: Sometimes, negotiating with your lender can help you get better rates. This can help especially in situations where you don’t fulfil all the eligibility criteria. For example, if you don’t have sufficient income but are expecting a pay raise, offering proof of this can help you get good interest rates.
  • Take a loan from your existing lender: If you already have a savings account with a bank, try taking a bike loan from them. If you already have a good relationship with them, you can get better interest rates.

Why you should Compare Interest Rates before Applying for a Two-wheeler Loan?

The main reason why you should compare the interest rates of the loan options available to you is to know how much each one will cost you. This will help you calculate how much you will have to repay each month on each of these options.

This should help you find the cheapest loan. Comparing other parameters such as the processing fee and the repayment tenure will help you find a loan that best suits your current needs.

Things to consider while applying for a two-wheeler loan

In this section, we’re going to talk about some of the things you need to keep in mind other than the interest rate while comparing loan options.

Apart from the interest rate, there are a few other factors that determine whether a loan is convenient or not. Comparing these factors can help you find the ideal lender and the best two wheeler loan based on your needs.

Things to Consider other than the Interest Rate:

  • Processing fee: A processing fee is a one-time charge that your lender will levy for processing your loan application. This can impact your monthly repayments. So, even if you get a loan with a low interest rate, your processing fee will increase your costs. Choose a lender that offers you a low interest rate along with a reasonable processing fee.
  • Eligibility criteria: Each lender will have a set of eligibility criteria that you are expected to fulfil before they process your loan. Some lenders may have more stringent criteria than others. NBFCs may have the least stringent criteria. Choose a lender whose criteria you can easily fulfil. This should help you get your loan without any hassles.
  • Prepayment charges: Prepaying your loan can help you save money on interest costs. But many lenders charge a fee if you want to prepay or foreclose your loan. Compare these charges if you plan to prepay or foreclose your loan in the future. This will help you find out if foreclosing a loan will be beneficial or not.
  • Other charges: Make sure you read the loan offer document thoroughly and find out every other cost there is. This will help you avoid surprise charges in the future. Also, it can help you find the actual cost of your loan.
  • Disbursal time: This is the time the lender takes to give you the money from the time you apply for it. Find out how long various lenders take to sanction and disburse your loan. This will help you especially if you’re in a hurry to get the loan to buy your bike.
  • Customer service: This is something many borrowers fail to consider when applying for a loan. A lender needs to have a good customer care service to answer your queries in the future. Not having a good customer service can be extremely frustrating.
  • Discounts and special offers: Keep an eye out for periodic discounts or special rates and loan conditions being offered by lenders. Many lenders tend to give customers special offers during festival seasons. Availing these may help you get better rates of interest, better repayment options, and other loan terms.

Factors that affect two-wheeler loan interest rates

Take a look at the various factors that impact the interest rate of your two-wheeler loan:

  • Your credit score: This is one of the most important factors that determine your interest rate. Most lenders have a fixed rate for these loans. But if you have a good credit score, you may be able to get a lower interest rate. On the other hand, if your credit score is bad, the lender will most likely charge you a higher interest rate.
  • Your income level: Every lender has a particular level of income they expect you to earn per month. The higher you earn, the lower risk you have of not repaying your loan. This usually means you will get a favourable interest rate. If you earn a lower level of income, you may be given a higher rate of interest.
  • Your place of work: The place where you work or the organisation you work for may have a say in the interest rate you’re given. A reputed company may mean that you have a stable job and that you’re drawing a stable income. This may translate into lower interest rates.
  • Your nature of employment: Lenders may offer different interest rates depending on whether you are self-employed or salaried.
  • Your age: Your age plays an important role in determining your interest rate. For example, if you’re nearing retirement, your loan may cost you more. This is because being closer to the retirement age usually means your capacity to repay a loan will be lower.
  • Your existing relationship with the lender: If you already have an existing relationship with the loan provider, it may help you get a better rate of interest. A good relationship with a bank can get you better loan terms.

Note: These are some of the main factors that determine your interest rate. There may be others that are specific to the lender from whom you’re taking a loan.


  1. Should I always opt for the loan that offers me the lowest EMI?

    While taking a loan with the lowest interest rate seems like the best choice, it may not always mean the lowest cost for you. The loan cost also depends on other factors such as processing fees, documentation charges, vehicle inspection fees, and other factors. Make sure you check all these as well before you decide on a loan.

  2. What are the different methods of comparing interest rates?

    There are two ways of comparing interest rates of two-wheeler loans. You can personally get quotes from each lender by either visiting their branch offices or by checking their websites. Or, you could take the help of a loan aggregator like BankBazaar which gives you the latest interest rates being offered by lenders.

  3. Will my lender change my interest rate during the tenure?

    The only way your interest rate may change is if you choose a variable rate. If the market rate changes, your lender may also change your interest rate to match the market rate. If you choose a fixed rate, it will not change.

  4. If I choose a variable rate, how often will it change?

    Your variable interest rate will change only when the Reserve Bank of India (RBI) changes the repo rate. The change will be directly proportional to RBI’s change. Meaning, if RBI increases the rate, your lender may also increase the rate. And if RBI decreases its rate, your lender may also reduce your rate.

  5. Will my variable interest rate go above the fixed rate?

    RBI usually looks at keeping its rates low so that borrowers don’t get affected by high interest rates. Due to this, there is very little chance of the variable rates going above fixed rates.

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